Donald Trump—along with some Republican leaders—says he wants to keep certain parts of Obamacare, such as letting young adults stay on their parents’ plans through age 26 and banning pre-existing condition exclusions. Coupled with the plan that Trump recently unveiled on his website—a grab-bag of hoary Republican talking points–these comments show how little Trump knows about health care.
Take the pre-existing exclusion ban, for example. As New York State proved years ago, requiring the guaranteed issue of coverage without a mandate to buy it makes individual health insurance unaffordable. Insurers must raise their rates if not enough healthy people buy their product or if people can wait until they become acutely ill before they seek coverage.
Selling insurance across state lines is another Republican replacement for rational thought. If people are allowed to shop for insurance across state lines, insurance companies will set up plans in the state that regulates insurance the least—say, Mississippi. Then they’ll sell cheap, skimpy plans across the country. Unfortunately, their customers will discover that those plans cover very little when they get sick.
In addition, the plans that are selling coverage in Mississippi would need to create provider networks all across the country. That would be a gargantuan task, and the insurers would likely build the same kind of narrow networks that Obamacare has been criticized for. The net result: crappy coverage and little choice.
The piece de resistance of the Trumpian healthcare plan is more consumer-directed plans with health savings accounts (HSAs) and high deductibles. HSAs are tax-favored accounts that can be rolled over from year to year and can be used to pay for medical expenses. They may be funded jointly by employers and employees or solely by individuals. These consumer-directed plans have expanded under Obama, and Trump wants to encourage them to grow further.
Employers sponsor consumer-directed plans as a cost saving measure. The idea is that employees, required to spend the money in their HSAs until they reach the deductible, will shop around for lower prices and will abstain from seeking unnecessary care. There’s evidence that the latter is true, but that can be a problem if people don’t seek the care they need. Also, people with advanced chronic diseases are likely to go through their HSA before they reach the deductible limit. And when people get really sick, they’re not likely to shop around; in most cases, they won’t have much choice in how much their care will cost.
People who work at low-wage jobs are unlikely to have a consumer-directed plan available. Even if they did have access to one, they couldn’t afford to fund the HSA; their employer would have to do it, and that would be unacceptable to businesses that pay minimum wage.
Poor people who can’t afford private insurance may be eligible for Medicaid. But many states severely restrict Medicaid eligibility. The Affordable Care Act (ACA) changed that by requiring that Medicaid cover everyone with less than a certain income and by raising the income ceiling for eligibility. In the states that expanded Medicaid with federal funds, there is no gap between Medicaid coverage and the eligibility to buy insurance on the health insurance exchanges with federal subsidies—a wondrous boon to the working poor.
To make American great again, Trump has decided to end this Medicaid expansion and to write the traditional Republican prescription for Medicaid: block grants to states. Then the states can decide how many people they want to cover. The 2015 Republican budget plan would have adopted block grants and cut the federal government’s contribution to Medicaid by nearly a trillion dollars over 10 years. The result would have been to throw out millions of people. This is a cynical and cruel approach, but it limits the federal government’s contribution to Medicaid and gives the states the flexibility they have long wanted. Only the poor lose.
Trump would also resurrect high-risk pools that, before the ACA, cost the states a lot to subsidize the purchase of insurance by people who were unable to get it from private insurers. Only a small portion of high-risk people were covered through these high-risk pools. This is how Trump plans to get people with preexisting conditions covered, but it won’t work if most of those folks can’t afford the coverage and states can’t afford to subsidize them all.
Finally, he’d allow individuals to deduct health insurance premium payments from taxes, just as businesses and self-employed people do.
According to a RAND analysis conducted before the election, Trump’s plan to repeal the ACA, provide a tax deduction for premiums, turn Medicaid into a block grant, and allow insurers to sell across state lines would together lead to about 20 million people losing their coverage.
The plain fact is that our President-Elect’s health care proposals are based on flimsy, outmoded ideas that won’t work. The reason why Republicans have supported these proposals for so long is that they think their “free-market” approach will give them what they primarily want: lower government spending on health care.
However, covering fewer people and giving them less health insurance won’t lower health costs. Without insurance or with poor coverage, millions of people will delay care until they have to go to the ER or the hospital. Also, unless Congress retains the parts of the ACA that focus on healthcare delivery reform, there will be less coordination of care, resulting in yet higher costs. If the federal government stops pushing value-based reimbursement, the key ingredient of cost control, the switch from pay-for-volume to pay-for-value will recede into the hazy future.
Without an all-out public-private assault on the seemingly intractable ailments that afflict our healthcare system, there’s no way to get health costs under control. And, with the government paying for more than half of the care delivered in this country, trying to move the burden to someone else will come back to bite us, the taxpayers.
Ken Terry is a healthcare journalist and the author of the book “Rx For Health Care Reform” (Vanderbilt University Press, 2007).